Earnings and tax help needed!

[littlemissmaker]

Hi all,

 

I'm not sure if this is the right forum to post this in, but I'm in need of some tax advice. I am a third year full time costume production student. Over the summer holidays I took on some work experience that offered me £150 for 9 days work. I had a bit of difficulty in getting the payment from them after the work was complete, so under the advice of the tutors at my college I submitted an invoice so that I had a leg to stand on if I needed to take it to small claims court. The company then sent me a cheque for the work, but they are now asking me for a UTR code for my invoice for HMRC purposes. I am not registered as self employed, and won't be until I graduate in June next year. I am now concerned about how to handle the tax on this payment. Should I be asking the company to pay it for me? If so, if they have already paid me, how do I go about sorting the tax out with them? Or, should I declare it to the HMRC and see what they suggest? The world of tax overwhelms me and I'm scared of getting roped in to doing self assessments over the measly sum of £150. Also, what should I say to the company who are now hassling me for the UTR code?

 

Any advice will be gratefully received!

 

 

Many thanks in advance.

[kerry davies]

Oh dear. Into the lion's den leaps the heroic Welsh twit.

It all depends and should have been sorted out by the "employer" beforehand.

If you worked a "normal" day for 9 days they should have paid you the NMW which is more than £150.

If you were on real work experience and did no "work" then £150 is generous.

If the £150 is "expenses" there is no requirement for UTR.

If they want a UTR then you need to charge them considerably more.

If they only want you to have the £150 I see no requirement for a UTR because you were not a "worker".

 

It's complex, innit? If I had found myself in this position, which I wouldn't, then I would contact Intern Aware at; This site and/or Rights For Interns at;the TUC They are experts and can call on legal advice and experience of others finding themselves in similar situations.

 

Thanks for raising this topic, it could help others, and do get back to us with the outcome.

[Junior8]

but they are now asking me for a UTR code for my invoice for HMRC purposes. I am not registered as self employed, and won't be until I graduate in June next year. I am now concerned about how to handle the tax on this payment. Should I be asking the company to pay it for me? If so, if they have already paid me, how do I go about sorting the tax out with them? Or, should I declare it to the HMRC and see what they suggest?

Any advice will be gratefully received!

 

You're here because you rendered an invoice, that means there is a paper trail at the company and you will be shown somewhere in their books as a supplier. For a start do not worry - if you have no other income, or no income above the personal allowance level less £150, there will be no tax to pay anyway. (The issue arises, mainly, because HMRC insist those who are not registered as self-employed are now dealt with under PAYE in order that they can at least guarantee getting the tax due off someone. The UTR simply confirms you are self-employed and they are not required to take the tax before paying you.)

 

You could simply register as self-employed now, using April 5th 2013 as the start of your business, and declare the £150 in you first tax return. Send the UTR details that HMRC will send you once you have filled in the form to the company - until them tell them to bl**dy well wait! (If you are thinking of becoming fully or partly self-employed when you graduate this might be a good idea anyway.) However if you do go along this route remember to check out and apply for the small earnings exemption from Class 2 NI!

 

There is nothing in the world of tax these days to overwhelm anybody really, as long as you declare everything and keep to the dates they require. They will demand the tax due no more/no less. See if your local businesslink in London offer a tax/book-keeping course.

[james141]

Hi,

Personally I would advise against getting a class 2 exemption. I had it for 2 years but then realised it may affect my pension in the future so canceled it for this tax year. It only saved me a few pounds in the grand scheme of things.

James.

[ImagineerTom]

If you believe that a state pension scheme will still be around in 45 years time (the earliest possible estimate before you could claim it) in any usable form and held to the same criteria as it currently is I've got a bridge I'd like to sell you...

[Junior8]

Hi,

Personally I would advise against getting a class 2 exemption. I had it for 2 years but then realised it may affect my pension in the future so canceled it for this tax year. It only saved me a few pounds in the grand scheme of things.

James.

 

Well yes, but it does depend on your circumstances at the time. If the OP had no other income and didn't apply for it in the current tax year she'd pay £120 to earn £150! You can give up the entitlement at any time, after all.

[paulears]

Asking for the UTR after the price was agreed and completed isn't really going to work for them. Their system will no doubt be compromised, but it doesn't mean they cannot get around it. What they may wish to do is pay you via PAYE, but then they'll have to pay you by the hour, pay you holiday pay, and deduct NI - and you will probably be asked for your NI number and a P45/60 which you probably don't have. In the great scheme of things it's not a huge amount, but doing it properly will mean NMW may well kick in. Taxpayers are allowed to submit invoices even when they have a job, and up to a certain level, they're free of tax anyway. HMRC really don't like to get involved in one-off casual work for students, only when you have a regular job. Good luck.

[littlemissmaker]

Thank you all so much, I am truly grateful for all your help and advice, it has been a big help!

 

I don't have any other income apart from a grant given to me by my university, occasional help from my parents, and support from my partner, so it seems a bit silly to register as self employed yet as it would be a big headache sorting out self assessment forms for just £150. I will treat it as expenses paid work experience as it only worked out at about £16.00 per day which just about covered my travel costs and buying lunch.

 

Am I right in thinking expenses paid work experience isn't tax detectable?

 

Thanks again for everything, you are all wonderful!

[norty303]

so it seems a bit silly to register as self employed yet as it would be a big headache sorting out self assessment forms for just £150

 

To be honest, now may be a good time to get to know the online system. I too was nervous and scared before I forced myself to look at it.

It would actually be remarkably quick to do your return because so many of the pages simply won't apply to you.

I have a regular day job, plus my self employed bit, so I have over twice as much to complete, and it's still not that complex.

The (more) complex part is UNDERSTANDING what you can/cannot claim back, etc which is something you deal with in your accounting package before you ever get to the self assessment.

I must say, as a freelancer who submits invoices for my work, not one organisation has ever asked me for my UTR